I just wanted to let you know that your economics crusader is on the case to score each and everyone of you a free iPhone and to save the environment while doing it. The path became clear to me this weekend as we used our Tom Tom iPhone app to do its usual navigation around Boston. This time, it could tell us whether there were any traffic incidents on our route and advise us of alternatives. With this, I could see it all.
And what did I see? Imagine that we all had this in our cars. Imagine also (and I know this might be a stretch) that we all entered our route plans into the iPhone and those plans were uploaded into the cloud. Then all of this information could be aggregated and the ‘optimal’ route for each of us worked out so that traffic was minimised. We would then receive directions based on the centrally coordinated route and all be better off for it.
Now, for this to work, a sufficient number of people would have to have an iPhone or equivalent. I’m not sure what the sufficient number is (it is probably less than 100%). Now you wouldn’t be compelled to follow the instructions handed to you but if it was meaningful you would follow them anyway as it will likely make you at least weakly better off by doing so. That is, the routes handed down could be incentive compatible and also update in real time as others came into and out of the mix.
The point is that iPhone adoption (and consequent buying in to the centrally controlled traffic system) would involve positive externalities and hence, there would be a prima facie case for public subsidisation of them. I think it is time for a movement or at least an ‘iPhones can save the environment’ Facebook group.